FUNDING HARDWARE STARTUPS презентация

RRE VENTURES | FUNDING HARDWARE STARTUPS

DISCLAIMERS

RRE VENTURES | FUNDING HARDWARE STARTUPS

Venture Capital

VC is just one option. There are numerous sources so make sure you evaluate the pros and cons of each.

Limited Partners
(public pension funds, corporate pension funds, insurance companies, high net-worth individuals, family offices, endowments, foundations, fund-of-funds, sovereign wealth funds, etc.)

Investment 1
(Ownership %)

Investment 2
(Ownership %)

Investment 3
(Ownership %)

Fund Management

Ownership of Fund

Out of Scope

In Scope

Institutional Seed
$500K - $2M+

Accelerator
$20K-$150K

Angel
$25K-$250K

The seed is the “setup” round(s) where a person or startup venture approaches an angel or a VC firm for funding their product / idea.

Source: wikipedia

3. Timing

Raise to accelerate growth. VC will help you scale but it absolutely will not validate your product and market.

Without VC Funding

Source: http://www.cbinsights.com/blog/trends/venture-capital-exit-timeframe-tech

The average successfully acquired US startup has raised $29.4M and sold for $155.5M

The average IPO-bound startup raised $162M before going public

Validating Demand

Capital Intensive

Venture Capital

Long Dev Times

Costly Distribution

Heavy Tech

High Volume Mfg

Crowdfunding

Software + Connectivity

Rapid Prototyping

Easier Distribution

Open Source

Lean Manufacturing

Industrial Internet

Benefits of launching
Validate early hypotheses
Social proof / traction
Feedback from real customers
Evidence team can ship
Develop “bootstrapper” mentality
Easier to raise capital

“If you weren’t embarrassed by the first version you launched too late.”
-Reid Hoffman

Investors

Successful Execs

Venture Capital

Professors

Industry Experts

Founders

Influencers

When selecting your investors there are a variety of factors that should go into the decision making process beyond financial terms.

“In this ever-changing society, the most powerful and enduring brands are built from the heart. They are real and sustainable. Their foundations are strong because they’re built with the strength of the human spirit, not an ad campaign.”

-Howard Schultz, Starbucks

“It’s not what you do, it’s why you do it.”
-Simon Sinek

What was the impetus for starting the company?

Why are you obsessed with solving this problem?

How did the founders meet and decide to partner?

Why are you willing to sacrifice years of your life to work on this?

What is your cause, your belief?

RRE VENTURES | FUNDING HARDWARE STARTUPS

Founder Intros

Angels and VCs are generally ‘networked’ so it shouldn’t be too hard to find them if you look in the right places and hustle.

Set Fair Terms

There are a variety of strategies you can take to increase your odds of finding suitable investors.

Traction

You + Team

Social Proof

Product

3. First Meeting

4. Diligence

4. Partner Meeting

5. Term Sheet / Close

80%

60%

15%

< 1%

Every investor / firm has a different process. Some make a decision in 30 minutes while others take months of diligence. Here’s my process:

30%

When evaluating early stage hardware investments there are a number of things that I look for and place value on.

Feel for Design

Real Problem

RRE VENTURES | FUNDING HARDWARE STARTUPS

Here are some additional things that I look for and place value on when meeting with seed stage companies.

Customer Obsession

During the process make sure you carve out enough time to learn about the firm, its process and how they think about your opportunity.

Product demos that don’t work
Derivative product and positioning
Long answers filled w/ buzzwords
Trying to have all the answers
Long pitch decks
Don’t have clear raise amount
Asking for investor intros after one passes
Overemphasizing PR and press
No product team in place
Pitching different partners in firm after a pass
Bringing non-founders to 1st meeting
Too many emails / follow ups

Edit Pitch Deck

Update VC Pipeline

RRE VENTURES | FUNDING HARDWARE STARTUPS

Immediately following each pitch session there are some best practices you can implement which should help you throughout the process.

Negotiate Term Sheet

Build Investor Syndicate

Review Docs

Sign & Wire

Legal Diligence

Usually four to twelve weeks

Preferred Equity

SAFE

Convertible Debt

So you closed your round and have cash in the bank. Now what? Here are some way to engage with and get value from your investors:

*Include what’s going well / not well, key metrics, hiring update, financing update, roadmap, help wanted

Specific Intros

Marc Andreessen
@pmarca

Chris Sacca
@sacca

Chris Dixon
@dixon

Josh Ellman
@joshelman

Vinod Khosla
@vkhosla

Naval Ravikant
@naval

Kevin Rose
@kevinrose

Howard Lindzon
@howardlindzon

Brad Feld
@bfeld

Jeremy Liew
@jeremysliew

David Lee
@davidlee

Mark Suster
@msuster

Dave McClure
@davemcclure

Fred Destin
@fdestin

Keith Rabois
@rabois

VC is just one financing option to consider
Raise to accelerate growth
Investors come in difference sizes and flavors
Prepare, work your ass off and hustle
Take advantage of resources on the web
The real work begins after you close your round